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Corona Capital

18 December 2020 By Breakingviews columnists

Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.


– Holiday Zoom

You’re on mute, mom. Zoom Video Communications, one of the biggest 2020 winners, is spreading the love this holiday season. It recently said it’s removing its 40-minute time limit for free video calls around Christmas, New Year’s and the end of Hanukkah and Kwanza to ensure socially distanced family celebrations don’t experience digital disruptions. In a year when the company’s stock price has gone up almost 500%, it can afford this gift.

But customers might want to return it. While the ability to check in with family via video chat has been a lifesaver during the pandemic, many may also suggest the benefit starts to wear off around the hour mark. And office drones may have looked forward to the holidays specifically because they’d get a break from marathon work calls. So the sentiment may be charitable, but when someone is stuck listening to their aunt describe her gluten-free diet for three hours, they’ll know who to thank. (By Anna Szymanski)

Fibre fever. Enel’s early bet on fibre is paying off in the pandemic. Defying sceptics, Chief Executive Francesco Starace has secured an equity valuation of 2.65 billion euros from infrastructure specialist fund Macquarie for the 50% stake it holds in broadband startup Open Fiber. That gives it an enterprise value of around 7.1 billion euros, once about 1.8 billion euros of debt is added. An earn-out clause suggests the valuation could rise to above 8 billion euros if Open Fiber merges its network with that of rival Telecom Italia, against an estimated book value of less than 500 million euros for the Enel stake.

That looks chunky: a recent KKR deal valued Telecom Italia’s last-mile network company at 7.7 billion euros, including debt. But while Telecom Italia’s FiberCop is predicted to report 900 million euros of EBITDA next year, Open Fiber is barely at break-even. JPMorgan predicts that the network challenger could approach 700 million euros of EBITDA only in 2030. If the deal is indeed completed, Starace looks like the real winner. (By Lisa Jucca)

Nearing the bottom. Sickly Paris offices could be headed for a revival. That’s according to U.S. property investor Tishman Speyer, which has splurged 750 million euros on three offices in the French capital in recent weeks, according to the Financial Times. The $97 billion fund, which owns New York’s Rockefeller Center, negotiated a 25% discount on the former headquarters of media group Canal+.

Bargain-basement prices may not last long. Low-rise buildings in Paris are much better equipped for pandemic living as staff can use the stairs, unlike in London and New York where long waits for lifts are a stumbling block to a full return to office life. This has not been reflected in prices. London office prices have held up much better: Great Portland Estates said the value of its property portfolio only fell 6.6% from March to the end of September. Tishman Speyer is betting that this divergence may not last much longer. (By Aimee Donnellan)

Against the stream. Online video service iQiyi has become the latest U.S.-listed Chinese company to tap markets for capital. It rounded up $1.6 billion by selling shares and convertible bonds. Despite the pandemic boost for streamers broadly, this fundraising was less about growth and more about fortification. Net debt stands at $1.7 billion for unprofitable iQiyi.

The $13 billion company controlled by Chinese web search outfit Baidu has lost 30% of its market value over the last six months. A U.S. regulatory probe into its accounting hurt, as did disappointing third-quarter results. Sales and subscribers dipped. Takeover talks with Alibaba and Tencent were also put on hold because of tighter oversight from Beijing, Reuters reported last month. That has left the shares trading below the $18 where they debuted in 2018. If iQiyi couldn’t capitalise on a big captive audience, things might get even harder for investors to watch. (By Jennifer Hughes)


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